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After losing out to Wausau, Wis., in 2011, Minneapolis reclaimed its top spot this year among U.S. cities with the highest credit scores.

Experian’s third annual State of Credit report says Minneapolis residents racked up Vantage scores averaging 787 out of a possible 990, way above the national average of 750. Beyond bragging rights, the numbers bode well for its residents getting better terms on loans.

Although the report shows some encouraging signs of credit improvement despite the recession, it also shows that some areas of the country are faring much worse than others.

Northern cities flourish, while southern states flounder
Experian’s report looked at the average Vantage scores of cities throughout the U.S. Vantage scores are developed jointly by major credit bureaus Experian, TransUnion and Equifax and range from 501 to 990 (the more commonly used FICO score uses 300 to 850). On both scales, the higher the number, the lower the credit risk.

As in the previous two years, this year’s rankings reflected a geographical divide. The Upper Midwest swept the top five, and the bottom five cities were all in the South.

Here’s a rundown of the cities with the top five and bottom five cities (and their average Vantage scores).

Top 5 cities:

Minneapolis, Minn. (787)

Madison, Wis. (786)

Wausau, Wis. (785)

Sioux Falls, S.D. (784)

Cedar Rapids, Iowa (783)

Bottom 5 cities:

Harlingen, Texas (688)

Jackson, Miss. (702)

Corpus Christi, Texas (706)

Monroe, La. (708)

Shreveport, La. (709)

Have recession lessons been learned?
Experian has conducted the survey for each of the past three years to see whether lessons have been learned from the economic downturn and whether Americans have improved at policing their spending.

Overall, there’s progress: The average number of late payments dropped 2 percent and average credit scores ticked up from 749 to 750 this year.

In several pockets of the country, the gains were dramatic. Two cities hit particularly hard in the recession — Las Vegas and Bakersfield, Calif. — were among the biggest gainers in credit scores since 2011. Both have been in the bottom 10 the past two years, but managed to avoid climb out of that ranking this year.

Some factors that likely helped consumers in managing debt were big reductions in foreclosure and unemployment rates. Las Vegas’ foreclosure rate dropped a whopping 162 percent, and unemployment dropped 2.5 percent from 2011 to 12.5 percent in 2012. Bakersfield residents were able to reduce their late payments by 28 percent, while foreclosures decreased 15 percent and unemployment decreased 10 percent to land at 13.9 percent. Consequently, Bakersfield consumers had the highest credit score gains in the survey, reaching an average of 717 (compared to an average of 708 just two years ago).

“Increasing numbers of Americans are showing they understand how credit works. They’re paying their bills on time and lowering their debt-to-limit ratio,” said Maxine Sweet, Experian’s vice president of public education, in a news release. “It’s encouraging to see them demonstrating that they have the resources to make those positive changes in how they manage credit.”

Experian took a look at more than 682,000 credit files and analyzed consumers’ average credit scores, debt levels and credit utilization in more than 100 U.S. cities.

So what is No. 1 city Minneapolis doing right?

“The most significant thing in Minneapolis is that consumers miss fewer payments,” Sweet told Credit Card Guide. “They don’t carry less debt, but they have lower utilization, meaning they aren’t charging their cards to the limit. We also note that they have lower unemployment, fewer foreclosures and are highly educated compared to the averages in other cities.”

If you will be shopping for a mortgage anytime soon, know that the credit score bar has been raised.

The average credit score for people who landed mortgages in 2011 was 737, which is the highest rating on the 300-to-850 FICO scale since at least 2000, according to CoreLogic, a mortgage data and software company in Santa Ana, Calif. There were no signs of it dropping much for the first months of this year.

For comparison, the average score for mortgage approval in 2000 was 696. It has been steadily climbing for 11 years.

Other funds easier to get
Not all avenues of borrowing are becoming harder to access, however. While mortgage lenders have gotten more picky, qualifying standards for credit cards, car loans and business financing have loosened, according to the Federal Reserve’s April senior loan officer study on bank lending.

That study found that the percentage of banks that reported they were more willing to make consumer installment loans rose to its highest level since the first half of 1994.

About 20 percent of banks, and these were mostly large banks, reported having eased standards for approving credit card applications. Standards for loans to buy new and used car were eased by about 15 percent of banks.

Tips on getting best mortgage terms
But if it’s a mortgage you need, your credit score will likely have to be higher than the current midpoint score for all consumers, which Fair Isaac Corp. puts at 711. To get there, your credit report may need some polishing. Here are some tips for making sure your score looks good to creditors:

Pay all your bills on time. Every one. Payment history makes up about 35 percent of your score, so attention to detail here is crucial.

Keep your credit use low. Keep lots of air between your credit limit and what you’re spending. A good target to hit for credit utilization is no more than 30 percent.

Don’t make a major purchase before the mortgage is finalized. Banks will see that as one more thing diverting your finances from paying on the mortgage. Be advised banks may recheck your credit up until the day you sign.

Don’t close existing credit card accounts, even if you do not use them. About 15 percent of your credit score is based on your credit history and leaving them open gives you the benefit of the history they represent.

Finally, don’t forget to pull your credit report for free at AnnualCreditReport.com. Make sure you know where you stand and check to see whether there are charges outstanding that you didn’t put there or have already paid off. You can also pull your credit scores for about $20 each from Equifax and TransUnion at MyFICO.com.

I admit it. I’m kind of a pushover. If someone asks me for a favor, I have a hard time saying no.

It’s gotten so bad that I’ve taken to screening my calls when certain family members’ numbers show up, and I shamelessly pretend I’m so busy I can’t breathe when I accidentally pick up and sense from a loved one’s tone that they didn’t just call to ask how my weekend is going.

According to a recent study, agreeable people tend to have lower credit scores than rude people – probably because we often struggle to say no. Researchers at Louisiana State University theorize that the kinder you are, the more likely you are to act on risky, altruistic impulses, such as co-signing someone else’s credit card or giving in to a pushy salesperson’s pitch for a store card with a sky-high APR.

Unfortunately, I’m guilty of that last one. Having worked in retail, I’m all too aware of the pressures that are put on cashiers to sell those cards and feel a twinge of guilt every time I say no. I’ve now got a Gap card with a small but significant balance on it and sincerely wish I had just politely said no thank you when I had the chance and shrugged off the tempting discount.

Lately, I’ve been working on increasing my good-but-not-fantastically-great credit score, but I didn’t think that my attitude might be something I need to work on as well. However, if I ever want to pay off my credit card balance and lower my credit utilization rate, then I probably need to rethink my tendency to overtip at restaurants or say yes every time a kid selling wrapping paper knocks on my front door. I’m not sure I want to do that, though. I think I’d rather just take the lower score.

With irrational money choices in mind, here are my seven favorite blog posts from the last week:

1. MoneyNing looks at how our monkey brains cause us to make financially poor decisions.

It’s easy to talk the talk and say you’re going to pursue a long-term financial goal, such as ‘reshape your budget’ or ‘become debt-free for good.’ However, if you’re like me, chronic procrastination – and a tendency to favor the big picture over the mundane — can easily derail you.

Lately, my grand plans for deliberately increasing my credit score so I can qualify for a low-rate car loan in a year or two have been in long-term limbo while I scramble to keep up with all my other daily tasks and plans.

For example, I’ve been planning since August to ask for a credit limit increase on my credit card so I can bump up the amount of credit I have available and improve my credit utilization rate (which measures how much of your available credit you’re actually using). However, it took me more than three weeks to actually pick up the phone and call my issuer to ask for it.

Luckily, asking for a credit limit increase is fast and simple – especially if you only ask for a small amount. (For example, to increase the limit on my Bank of America card, I just filled out a short form online and then followed up with a five-minute phone call to a customer representative.)

However, to do a credit limit increase right, without dinging your credit score, you’ve got to periodically ask for small amounts every six months or so and ask the customer service representative to increase your credit limit without making a hard inquiry on your credit report (which will negatively impact your score).

It sounds easy enough, but following through on simple but periodic tasks like that can be hard to do when life gets busy (just ask anyone who’s lost money because they forgot to turn in a rebate).

That’s the less-than-fun part about financial goal-setting. Many of the steps you need to take to meet big financial goals, such as saving for retirement or sticking to a budget, are relatively easy. However, they take careful planning and mundane detail work to do right.

Looking for a little commiseration, I scoured the personal finance blogosphere for some posts on the detail work we all have to do to meet our financial goals. Here are some of my favorites from the last week:

1. Always the Planner rebels against the time-sucking tedium of tracking your spending and decides to give her budget some much-needed breathing room.

2. In a guest post on zenhabits, Man Vs. Debt takes the opposite approach and extols the consciousness-raising virtues of detail work. Automating money tasks, such as tracking spending, buries the problem, he argues, rather than helps solve it.

3. Budgets are $exy reflects on why it’s so difficult for many people to get around to making returns and shares some tips on how to successfully return items you don’t want or need.

4. Well Heeled Blog shares some money-saving tips on how to successfully ask for a price adjustment with a simple email or phone call.

5. FreefromBroke pans money-gobbling rebates, which far too many of us forget to redeem, and gives some tips on how to make sure you get the money owed to you.

6. 8 Women Dream reflects on the costs and value-driven causes of procrastination.

As I was driving along the interstate on a recent weekend, the plastic undertray beneath my car bumper came loose for the fourth time in less than a month — causing an angry scraping sound that made me think that something was seriously wrong with my car.

Fixing the immediate problem turned out to be easy — a mechanic had already taken most of the undertray off the last time it had fallen down (“You don’t really need it,” he muttered unconvincingly as I watched him pull it off) — and so I just had to cut off the rest with heavy-duty scissors. However, as I crouched underneath my car in the hot sun and surveyed the damage, I was painfully reminded that my beloved nine-year-old Toyota is starting to fall apart.

I sincerely hope hoping that it still has a few years left before I have to buy a new car. However, I’ll definitely need a car loan when I do, which means that I’ll have to start proactively working on my credit score now if I want to get the best rates.

Starting next week, I’m going to begin working on my FICO score for the first time in my financial life and will document my attempts here. However, first, I’ll need to get organized and simplify before I start adding things on like an additional credit card to my already overstuffed to-do list.

With that in mind, I scoped this week’s blogs for tips on how to organize, simplify, and, as always, live better with less. Here are my favorite picks for the week:

1. The Digerati Life takes a hard look at the high cost of disorganization and provides solutions for the scatterbrained to help us save money – and our sanity – with a few simple organizing systems.

2. Len Penzo extols the crime-stopping virtues of the mighty paper shredder – another organizing essential for those of us who tend to keep papers for life.

3. MoneyBeagle reflects on the “I’m stressed, therefore I spend” trap that many of us fall into when we’re feeling drained.